Thursday, 25 Jun 2009

Greenback Gains Ahead of Fed Chairman's Testimony

U.S economic news dominate the market today, as investors stand by for the latest reports on housing, and the Gross Domestic Product (GDP). After the greenback lost early gains on the Fed's commentary yesterday, traders have turned to today's new Jobless Claims for insight into the U.S economy.

The number of U.S. workers filing new claims for jobless benefits rose in the latest week by 15K to 627K according to the Labor Department. Also today, the GDP indicator, which measures total output within U.S. borders, dropped by another 5.5%. The U.S GDP report reflected that since the beginning of this year, U.S. economy is still in a deep recession. Despite the data which showed a rise in Jobless Claims, the USD continued to add to its value, gaining virtually against all its major rivals. The Dollar rose 0.6% to 96.20 vs. the JPY and 1% against the British Pound. The USD also surged 0.1% vs. the EUR to $1.3919. Yet, several sectors of the US economy, such as Housing and Manufacturing, are showing a smaller pace of decline. Based on that, the Federal Reserve stated yesterday in Washington that the economy's slump might indeed be easing. Investors quickly react to such statements, rebuilding their trading confidence. As a result, markets financial market volatility is abating, which proves to be positive for the U.S currency. Traders will be watching for Chairman Bernanke's testimony at 14:00 GMT before the House of Representatives Committee on Oversight and Government Reform.